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tv   Bloomberg Markets Americas  Bloomberg  January 24, 2018 10:00am-11:00am EST

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vonnie: we had back to the world economic board. the weakening dollar. we start this hour with breaking economic data. we're looking at existing home sales in the u.s. for the month of december, and at this time, we are looking at a bit of a miss. the survey has been calling for 5.7 million homes to have been sold in the month of december. instead, 5.5 7 million homes were sold. a slight mist, but that represents a 3.6% drop from november sales of 5.8 one million. that was an 11 year high. not much of an influence on the major averages. we have been going into the existing home sales number with gains for the major averages, record highs, and we still have a gains in record highs. the dow clearly being held by goldman sachs along with boeing
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and ibm. the bloomberg dollar index right now down nearly 1% at session lows. on paper, it's worst day since march of last year. this after treasury secretary steve mnuchin said in davos that a weak dollar helps us, good for u.s. trade. we see the dollar down on this following a big down your last year. let's take a look at the fact that was secretary steve mnuchin was talking about. the bloomberg dollar index down nearly 1%, it's worst year on record. the dollar index, its worst you last year since 2003. the point we want to make here is when we have declines, they come in clubs of twos. a two-year decline seems pretty fitting even though it is early in the year. let's take a look at the big movers of the day. ge down .2%.
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this on the news of the sec probe into the company. recently announced a charged related to the legacy business. texas instruments down on earnings. ual, same deal, down on earnings. united continental saying they will be matching pricing. investors clearly not liking that, mark . session, downeek marginally after four days of gains after rising yesterday to the highest levels since august 2015. what a day. what a day for u.k. jobs. the labor market displaying unexpected resilience in the three months through november. employment rose. rose.grow 102,000 the far right bar there. growth weekend to 2.4%. still lags the pace of
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inflation. unemployment fell by 3000 during the period, leaving the jobless rate at a 42 year low of 4.3%. let's take a look at how sterling is reacting. 140, 141. now. about 142 what is the main driver of the pound rally? it is a question worth asking. perhaps the u.k. two-year yield is telling us something. that is the blue line. sterling dollar is the white line. the correlation between the two is increasingly strong, nearing .5. that is the bottom of the chart their. the two-year yield rose to a two-year high of 59 basis points on janeway 15. -- january 15. the day of brexit, closed at 148.77 before falling 8% the following day to close at 1436.79. the post-referendum intraday low
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was 118.41 in october 7, 2016. seems like a long time ago. let's talk about somebody some busy data releases today. one company starts 2018 with a rose your outlook and a new chief executive. the percentage increase in earnings excluding some expenses this year will probably be in the mid to high single digits after showing no change in 2017. a constant currency. excluding some items. beating estimates.the new chief executive will arrive next week counting on new medicines to boy's sales and the erosion of the aging blockbuster medicine from cheaper medicine. today.lmost 3%
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vonnie: davos bracing for president trump's arrival and his team is setting the stage. steve mnuchin is breaking with tradition and endorsing the dollar's decline as a benefit to economy.can he says "a weaker dollar is good for us as it relates to trade and opportunities." says the, wilbur ross u.s. will fight harder to protect its exporters. joining us is bloomberg international economics correspondent. it fair to say in spite of what the administration says it wants to do, lots of trade with lots of different partners? >> that is something that they say. we don't know how they feel about it. they don't want to not do trade. it is good for the economy, but whether they have a way to do it correctly is open for debate. the administration in a very with position
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the thinking of most mainstream economists. wilbur ross thinking trips are on the way gives the world the impression that the u.s. might be readying for a trade war. the rest of the world has been picking on the u.s. for some time, but it is steve mnuchin's comments hitting traders attention today because it has been a long time since the u.s. actively wish its currency its currencyhed was weaker. 5174. lloyd bentsen was treasury secretary in the early days of the clinton administration. he said the yen should be stronger. the dollar should be weaker. you can see what happened. the dollar weekend and the trade deficit with japan, these were in the days when everybody was afraid of japan come in china. widened considerably. he came along with that statement and both of those things turned around. that has been the de facto policy of the u.s. treasury department ever since. vonnie: is in a court needed
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response, or is it not coordinated? if we are going to negotiate better trade deals, why would we need a lower dollar? michael: in theory you don't, but the lower dollar has the effect of making u.s. goods cheaper overseas. what mnuchin is saying is true. whether it should be policy is another question. the other thing that happens when he got a weaker dollar is you can import more inflation. but i to be lucky than good. he is saying this at a time when we don't have a lot of inflation so it may not be as much of a danger as the days when lloyd bentsen was talking about it. it also means if inflation is higher, the fed would have to raise interest rates were quickly and that is not happening -- more quickly, and that is not happening. we will see if this represents a change in policy or not. mark: thanks a lot. let's chat about today's currencies in more detail. we are joined by richard jones
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from bloomberg markets live in berlin. richard, what is mario draghi thinking given comments from the likes of mnuchin and some america first rhetoric from the last 24 to 48 hours? richard: i think the weaker dollar will be something that will be on his mind and on the mind of other central bankers as well, mark. but realistically, there is a nice vacation. a consensus going in the market that mario draghi will engage in pushback against the strength of the euro dollar exchange rate. we heard it from his vice president last week. the expectation is draghi will push back on the euro strength. i think the danger for mario draghi is with those expectations being so high, it is going to be very difficult for him to actually pushed back enough to arrest the euro's move higher.even if there is a pullback in the euro, we will probably not get to levels where it undoes the rally that
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we have seen. and the other thing is a lot of this is out of his hands. but to the extent that i think he may be concerned about the pace of the rise in the euro, we may get some pushback. let's see if it is effective. strategy.september he warned the volatility was a source of uncertainty that requires monitoring. the euro drifted lower for a couple months. does he is the same sort of words that use -the same's- does use the sames he sort of words? richard: i would not be surprised. whether or not it is successful or not, it is yet to be determined, but you could see that being the type of push back the mario draghi engages in tomorrow as he has done before. vonnie: the markets listen to mario draghi as it relates to the euro because he has the central bank behind him, but
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when it is mario draghi versus the u.s. almighty dollar or the less than almighty dollar these days, will markets listen and taken seriously? richard: i think he was a key point that for any currency threat, there are two sides to every story. the interesting thing about the mnuchin comments today, we have already been for the past four or five weeks, we have seen the resumption of the dollar weakness that we saw most of last year. in essence, the mnuchin comments through a bit of gasoline onto that already sort of raging fire. it will be difficult for mario draghi to push back on that because the u.s. seems intent on foregoing the strong dollar policy they have had. there will be some pushback from mario draghi, but there are questions about how effective that will be. vonnie: richard jones in berlin, thank you. let's check in now on the first word news. here is taylor riggs. the influential costolo
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network is asking president trump not to ask the gas tax to pay for infrastructure. och support a lobbying group said the hike would undermine the recent tax-cut. pushes administration for footstep recipients to go back to work. of government says 57% working age adults getting food stamps either have a job or are looking for one. republicans call it a step back in negotiations on immigration. senate democratic leader chuck schumer has withdrawn the offer he made last week to give president trump money to help build a wall on the mexican border. the president says if there is no wall, that will not be a deal. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. i'm taylor riggs. this is bloomberg. vonnie: coming up from
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"bloomberg markets," davos getting ready for the arrival of president donald trump. anthony scaramucci joins with his take. this is bloomberg. ♪
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live from london, i'm mark barton. vonnie: from new york, i'm vonnie quinn. this is "bloomberg markets." president trump departs washington around 8:00 p.m. eastern tonight heading for davos. already, his lieutenants are making waves at the world economic forum. treasury secretary steve mnuchin said the weaker dollar is good for the u.s.. let' let's get straight to dollars right now. we go to erik schatzker. erik: good to see you. i am here with anthony
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scaramucci, th. great to see you. anthony: great to be here. beautiful day. erik: it is a gorgeous day. any idea what president trump will say in his address? anthony: i have not seen his speech but i think it will be along the lines of what he said at the u.n. and other places, putting the american people an american citizens's interest first, not contrary to being part of the global system and part of the world order. in some respects, he would make the case that delivering more aggregate demand and purchasing power for middle-class families and lower middle class families is actually better for the world. erik: is this the right place for a stephan miller speech? or should somebody else write it? anthony: is that a big journalist situation, who is writing the speech? i don't know who is writing the speech, but i would say stephen is a great writer. erik: but does he write a certain kind of speech?
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anthony: he has a certain kind of speech, but in general, this will be an extension of the president's personality. he wants to help global peace and prosperity, but he does not see that as going against being an american first leader. as he said at the u.n., he expects all citizens to put their country first. erik: what is your next act? anthony: that is a good question. we were talking during the break. you have to tell me what is going to happen with the sale. erik: let's say it might go through. anthony: if the sale goes to and ii would like have talked about reaching some equity in the firm and being active in trying to help the firm's growth and prosperity. obviously, the conference businesses and things like that. erik: what happened? goesny: is the sale through, myself and my family will own 51% of salt. &a willble own 49% -- h
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own 49%. erik: will it be in vegas this year? anthony: saw this year, we will do something different. we are in the process of setting up the classroom experience and we will curate a five-day trip to china for our best partners. we will visit three cities in five days. we will go to the manufacturing city, beijing, and shanghai. we will meet with some of the finest people in china. not governmental officials but entrepreneurs. erik: know vegas in other words. -- no vegas in other words. anthony: no vegas, but i expect to be there in 2019. we started in 2009. this year it has to do with the logistics of the closing around the deal. you have been to it many times. i want to put a very high quality product together and i think this is an opportunity for
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us to take a group of our best clients and curate an experience for them in china that they could not get on their own. erik: what if the sale does not go through? anthony: listen, the sale does not go through, my partner has done a great job managing the firm in my absence. erik: for you, what happens for you? anthony: my guess is i will sit down with ray and my team. erik: will you go back? anthony: possibly. why not? erik: is there anyway you go back to the white house? anthony: i don't see any way for me back at the white house. if the simplest goes through, i am still retaining equity in the firm. i would have to shut that equity -- shed that equity to go to the white house. i don't really see a possibility of me returning to the white house. i know there has been speculation about that. never came for me. i have not set out to anybody and i am not that presumptuous. erik: you have been dragged along. what would you give the sale? anthony: still better than even
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odds. it does not look like there is anything. think selling it is a national security issue for the united states, but if it is, i would like to find out why it is an someone would have to articulate that to me. politics, i have learned a lot in the last year since i sat up here with you. washington is a funny bird of a place. we will have to see what happens. i don't want to comment more than that because these processes are anonymous and you have to respect the process. erik: given what you have been through, you have learned more than me. anthony: you never give up. that.trepreneurs know you can control your destiny if you can control your mind. erik: back to you from the world economic forum. anthony scaramucci. vonnie: i always hoped we would arrive at that place where we can control our minds. thank you for that great interview at the world economic forum in davos. he met with somebody of bain capital.
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mark: let's stay in davos. we have been speaking with the south african deputy president in his first international exclusive with bloomberg. he said that the government has begun tackling the corruption that has become pervasive in the states he was elected leader of south africa's ruling party last month, positioning him to succeed president jacob zuma. bad.rruption. quite corruption go quite badt. it took quite a bit of time for all of us to realize that this was a network which was well thought out, which resulted in the capturing of the state. when the newspapers started revealing it, and when the emails started spewing out, we then realized it was far more serious than what we had hoped. cleaning up, clearly is going to
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be quite a mammoth task, but we have to start somewhere, and i believe we have already started with cleaning up our state owned enterprises. a wholek, we dismissed border of the electricity company that we have, and we install a new board, a new ceo. those who have been found complicit in wrongdoing have been removed and will continue to be removed as we find things so the wheels of change are moving out, and they are going to start speeding up as we go into other government departments, state-owned enterprises. it is imperative that we should clean up south africa and ri our country of corruptiond because that is what is holding us back from reaching our goals. our people are clamoring for a clean government, and that is
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what we are going to give them. >> do you think president zuma will step down before his term ends? we are in a transitional process now. we are discussing this. a number of commentators, a number of members and other leaders of the country say he must leave right now, but we have taken the view that this is a very delicate matter. to servehas 1.5 years his term out, and we decided we are going to manage this transition very carefully. what we don't want to see is a humiliation of a person who is the head of state. what we don't want to see is him being treated with disrespect, but in the course of all of this with cooperation as far as managing this transition, we will manage it so well that it does not divide the nation, and
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we will manage it in the interest of the people of south africa. >> so i am only, you think he will serve his full term or anything can happen? >> we are managing the transition. we are in the course of managing this transition. all i can say to our people is that, let's allow this process to unfold. let's see where it finally leads us. >> how worried are you about the rating agencies cutting your debt again? >> i am much more confident that we now have a better foot before . many of us will be actively involved in having a dialogue with them. some of the things that they were worried about we are putting right now. we are correcting issues of political instability. more stable now. we are correcting issues of
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regulatory uncertainty. we are attending to that. we are also addressing issues of where growth of our economy will come from. ofare also addressing issues our state owned enterprise reform process, and i think we have a much more positive story to put to them. it is not like last year or a year ago when we were all over the show. to thehave a clear path better future of south africa and have a game plan. we now know where we are going, and we are meeting our country of all the bad things that have been holding this back. >> will be rating agencies give you the time to do that? is there a danger they cut your debt rating at the next budget? >> we are hoping. i am hoping. we are going to work very much towards this, that they will
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give us time. usy will see that all of south africans are united. that correcting what has gone wrong, business is with us. labor is with us. government throughout various structures of government working together and community-based organizations. you cannot do any better. thatis like a potent force even rating agencies will realize that south africa now is on a correction path. we are correcting things, and we are renewing ourselves and uniting a nation. a nation that wants to go. a nation that wants the past to be behind us and correct all of the bad thing. the rand is gaining today isn't it?
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vonnie: he speaks very well, and clearly what he says is what the market is bearing out. the rand has gone through 12 per dollars for the first time since may 2015. it is stronger by about 4%. it started the year with a bang. still ahead, how are private equity funds changing their plans now that the tax overhaul is a reality. the cochairman of bain capital's is next. this is bloomberg. ♪
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vonnie: live from bloomberg world headquarters in new york, i'm vonnie quinn. mark: live from bloomberg european headquarters here in london, i mark barton. this is bloomberg markets. let's check in on bloomberg first word news.
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taylor riggs has more from new york. taylor: the acting head of the u.s. consumer financial protection bureau has pledged to tone down the agency's aggressive regulatory stance, writing in the wall street journal. he said he would continue to enforce consumer protection laws, but he says the agency would no longer assume that financial firms are the bad guys. republican lawmakers are questioning president trump's trade policy. a senator from kansas says every republican senator is concerned about the direction the president is taking on trade from imposing tariffs on solar panels to walking away from nafta. he says rolling back trade deals with do with unexplained gains from the tax cuts. against a possible north korean missile attack has improved. be $36 billion system of interceptors has demonstrated the ability to defend the u.s. against a small number of missiles.
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the report is more optimistic than past assessments. practice are starting to show in china's $15 trillion shadow banking industry. investors are backing away. the biggest problem are the so-called trust products, a popular way for developers and governments to raise money . two of the products recently delayed payments. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. i'm taylor riggs. this is bloomberg. vonnie: thank you. private equity firms are still waiting the impact of the new u.s. tax law while also keeping a close eye on valuations. for more, let's get to davos, switzerland, and erik schatzker. erik: thanks once again. i am here with the cochairman of bain capital. great to see you here in davos. we do this every year. stephen: fantastic to be back. erik: a couple of things have
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changed. the tax bill is an important factor, certainly for your industry. how you analyze the impact of the tax bill on potential deals. industries are better targets for private equity as a result of this piece of legislation, and which ones are less attractive? stephen: honestly, the tax bill is good from a macro standpoint from a business cycle standpoint because it can bring money back to the country. and will make businesses be more valuable because it can free up the cash and will put money in consumers's pockets. in terms of specifying where it will be good or bad, we don't look at it that way because we are looking to transform businesses and make a huge impact on the top line and bottom line so as we have analyzed it, the taxes are really an issue on the margin. we would not be driven by any kind of tax considerations to make an investment. more like, 10 we drive the company and make it more profitable? erik: in other ways, the kinds of companies that are affected are not the ones that appeal to
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bain? stephen: no. we look at its company at its own era, but i don't think it is enough to move the needle to say to do an investment or not do an investment. we have to believe it is a strategic investment that will be a bigger and better company at the end of five years. erik: usually raised a new $9.4 billion fund for north american private equity. how on earth do you plan to deploy that comfortably with valuations ever higher every day? stephen: that is a great question. we are working hard to do that. we have to be disciplined. i would say this is a year to proceed with caution. we have fallen back on our roots and looking at companies taking a few of the deals we have done recently, taking two companies and put them together day one so you get instant synergy. the issue for private equity is the multiple are at the very high end of what they have been. erik: noticeably? -- nos
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ebleed? stephen: i would not say that yet. was in theappy 25 it 2007 period. the key issue for private equity is it is not going up. lower or the same as what we bought in at you have to prove the earnings and sales of the company. consolidations, taking companies and investing in technology and growing them. we did the world financial payments and created a new system and that helps create a new company. erik: you had a tough on last year and retail with gymboree and toys "r" us. both went bankrupt. do you think retail is an industry that might hold some appeal for bain in the future? stephen: we have had a strong retail presence for many years.
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we got a great track record in retail overall. those funds both performed well overall, by the way. we look at some excellent that as a learning experience and we learned there is a lot of disruption out there. because ultimately changed in five years -- retail has ultimately changed in five years. we have done a great job finding companies that basically have sold through all that and used the new distribution channels to sell even more. i think we all learned as we go along disruption is a key element of technology is changing everything. almost every company is a technology company now. erik: where are you seeing that kind of disruption that might make you cautious and think twice about committing capital? stephen: in the industrial sector, clearly the automotive industry is at the beginnings of a great change. electric cars are penetrating, led by tesla, but you are seeing
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more and more on car chassis. that will change the supply chain. at downstreamking industrial companies, you have to really factor that in. erik: you are launching a real estate division. 22 people from the harvard endowment. you got a $3.4 billion portfolio. here is my question to you. blackstone, brookfield, lone star, starwood, they have been at the real estate game for more than a decade and the are huge. others have tried to compete with them and found it tough. why will you succeed? stephen: we have always been smaller in every aspect from those companies. we ca our fun sizesp at a smaller level. we are looking for value. we are not per se try to generate a lot of assets. we look at real estate for 20 years and did some deals that have great returns for us. this was a destroyed every opportunity given at harvard had a top-performing real estate unit. they were three miles from us. they were one of our investors and partners.
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they decided they are not going to go direct anymore, and we were a hand in glove fit because we were not a real estate group and this group is a very top performer so all they had to move was three miles down into our offices so it was a win-win situation. erik: would you look to raise outside money? if so, when and how much? stephen: we are managing the harvard portfolio and they are still looking at deals. looking to raise funds pretty soon. erik: pretty soon meeting 2018? stephen: even sooner than that. erik: like in the next couple of quarters. thank you. capital,irman of bain lots to talk about.real estate , private equity. more coming from davos. vonnie: yes, seems like things are really moving and shaking at davos this year. thanks to erik schatzker. he will be back with another private equity tighten, david rubenstein, cochairman of the carlyle group.
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want to get a quick check on crude oil after oil inventories came out just a few minutes ago. over one million barrels. crude rising above $65 a barrel for the first time since december 2014. that is the 10th week now of a drawdown in inventory. rose salesventories by more than twice the survey, so pretty bullish signals for crude. a reminder, you can contact us a on twitter. you can watch tick-tock by bloomberg streaming live on twitter. here is one of today's highlights from davos. >> imf to campbell in davos, switzerland, here at the world economic forum meeting. tonight, gathering as they do every january to discuss the state of the world and what they see coming in the next year. the big subject obviously is donald trump, what his continued
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tenure in the white house means for the economy, and what geopolitical risks it presents. some here have been optimistic about what has been happening in washington because markets are rising, economic growth looks pretty good in the u.s. and in europe, and as a result, a lot of companies are prospering and seemed to be doing just fine despite the very unstable political news we are seeing just about every day. that is a pretty fragile confidence that there are many ceos here say while they feel good right now, they understand this could all follow are very quickly, whether that would come from a war in the korean peninsula, from a move to terra terra part nafta or some other thing. once again, this is matthew campbell in davos, switzerland. you can follow me on twitter. of course, for the latest updates, follow at to talk -- @
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vonnie: in new york, i'm vonnie quinn. mark: live from london, i'm mark barton. this is bloomberg markets. time for the bloomberg business flash of a look at some of the biggest business stories in the news right now. chief executive of saudi aramco says the company is still ready to conduct its ipo in the second half of the year. spoke to bloomberg in davos. >> we did a lot of work in the different stock exchanges, new york and hong kong stock exchange, and each one has its advantages and pros and cons. the committee is looking at all of that information.
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the ipo is expected to create the world's largest trade company. an investigation into general electric after it took a $6.2 billion charge for an old insurance business. ge says it is cooperating with the investigation. the company surprised investors last week with the news. the european union has come down hard on qualcomm. the eu find the company $1.2 billion. regulators call that a violation of antitrust law. qualcomm says it will appeal. that is the latest bloomberg business flash. vonnie: we all just heard a moment ago from boston-based bain capital who spoke with erik schatzker. now we want to get back to him in davos. erik, what are people talking about today?
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day two of davos now and leaders are speaking today, many of them. erik: i told you yesterday i was surprised at the level of optimism here. we knew coming into the world economic forum that people were going to feel better about the global economy and financial markets than they did last year because of where the stock market is gone, because of tax reform, because of optimism for the infrastructure bill when and if it happens, but when i heard es of interestingly are not caution and not about what people should be doing today. if anything, the economy has been described as goldilocks or perfect, and that may last for 12 or 18 months, but these people, and i am talking about jamie dimon for example, radel are going concern about what happens after the 12 or 18 months goldilocks period.
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at some point, the presumed inflation is either going to appear or the fed is going to anticipate inflation and feel as though it has to act, and the speed at which the fed acts and the degree to which it is at odds with what is priced into the market could create some unpleasant surprises. at the very least for investors and possibly for the real economy as well. so it is not like rain on the parade, but it is worth noting that amid all the optimism, some people are looking further out into the future and trying to figure out how to plan their businesses and how to invest accordingly when these happy days are over. vonnie: yes, and i guess one of the questions will be the speed at which that happens. i know you have a another wonderful guest for us now. looking forward to the conversation. erik: thank you so much. it is david rubenstein, a face we know well on bloomberg television. your day job remains being the
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cochairman and the cofounder of the carlyle group. great to see you. david: my pleasure to be here. erik: you have had a few weeks bill, how ithe tax affects your portfolio companies, how it affects the markets in which you operate, how it changes the calculus on deals and financing. what kinds of conclusions have you drawn? david: generally, it is positive for our industry and the economy. the industry is going to be benefiting from the fact that our portfolio companies will have a lower tax rate, and i think the confidence that the business community has because of the tax cuts will make it easier to get some deals done and make our companies better so generally we think it is a pretty positive thing for the business and the economy generally. erik: is there any doubts of unanticipated consequences you think that might become clearer most of the time? david: the bill is a very long bill. nobody knows everything in the bill and you cannot be sure what the consequences will be. the bill is a bill that is supposed to have an effect for 10 years or so someone can predict that far in the future?
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what we know is pretty positive. i cannot say how the bill will work out in two or three years, but right now my concern is not the bill. i think it is pretty good. erik: does tax reform make certain industries more attractive to carlisle and others less attractive to carlisle? david: i would not say certain industries are benefited or harmed by it. erik: what kinds of companies perhapserik:? david: financial services is a very attractive industry and will be helped by the bill. i think health care industry is a very important industry for us , and that is important for our investment thesis. technology companies will do quite well. we are interested in many things outside the united states. those companies will be attractive to us as well. erik: what do you want to do on financial services? .avid: we have a fundavid: we have been investing in insurance companies, providers for those kinds of companies. we think the financial services just he do well because as people get wealthier in the u.s. and around the world, that you
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more financial service companies and investing in them will be a good thing. erik: is there an opportunity for carlisle to roll up some traditional asset managers? some of them you know there are questions around how much money they can make as active managers for example. david: we would not look at that right now in that context of our core company. our fund might do that. we don't for a long time tcw and still own a part of it but we sold part of it recently. erik: the consensus is the stimulus in the tax bill is going to extend the current economic cycle. do you agree? david: i think it will probably have some effect that way. recessions every seven years on average in the united states since world war ii. we are nine years into this growth cycle. we have never gone more than nine years since world war ii on a growth cycle. the stimulus will give us a record long growth period, yes. carlyle as a firm does not
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look like a good candidate for a secret conversion because you generate more relative to fees than the other alternative asset managers. is that fair? david: we do generate more carry than fee relative to our peers because we run the firm for kerry. that is what our investors wanted. our model has been to worry about carry. right now, our focus is running the business as it is right now. erik: are you focusing on a downturn if and when it comes as you evaluate and underwrite the deals you do? david: every time we look at a deal, we always assumed the economy will not be perfect for the next five years. slowdown in be some the next five years or so, so we are looking at that, yes. erik: here is another one for youerik:.brookfield and blackstone
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have been talking a lot lately about raising new kinds of vehicles, not funds really, perpetual apple vehicles where the money is locked up if you will almost indefinitely in a manner of speaking. they are more yieldy in nature. they generate lower returns over time. is that going to be an important business for carlisle? david: we are doing that already. i think i will be important thing for the entire industry, not just those two firms. everybody has some investors would like to have longer-term money with people like us because that saves them from having to reinvest in the money if we hold it for 10 years or more that will be an important part of our business for the next five to seven years. erik: two other areas in which you have been active in expanding, credit and energy. but that is already happening. what is the next step for carlisle? david: we want to build our credit business. we want to make sure our great business is as big and successful and global as our
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private equity business. we have a very large energy platform, a global energy platform. as energy prices come back, we think that business will do quite well. erik: is there any risk building a credit business at a time when we are likely to be entering a more aggressive tightening cycle? david: there is always with get anything we invest in and we get paid a large sum of money to make these, so we are careful about what we do. it is a risk, but a risk worth taking. atk: the cultural management carlisle is changing because you and your fellow entrepreneurial founders are stepping back and professional executives if i can call them that are stepping into on the firm on a day-to-day basis. how is not going to change the nature of carlisle as a company and its culture? david: we have a very culture, and the people who are now the of carlisle are people who have been part of our culture for a long time so we can expect a major change in our culture. bill and i are still going to be
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actively involved. day-to-day management will be run by glenn and q, but bill is still involved in the investment process. erik: no change? david: we have a lot of money invested. bill and i are the two biggest investors in the firm and we love what we are doing so it is not a question of work for us. this is pleasure. erik: you are not just the biggest shareholders. you own more than half the firm. how long will that be the case? david: i don't know when we will sell. i am not announcing the sale of our stock. erik: how long do you anticipate having that much of your net worth in carlisle's stock? david: it has been a great investment so i am not sure i will find something better. right now, it has been a great investment for me and my family. erik: how do you think carlisle will be different in five years? david: bigger, more profitable. bigger globally than it is today. i have comfortable with our future.
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we have a great management team coming in to run the firm and the senior people who have been around for a wild will not disappear. erik: always good seeing you. david: my pleasure. erik: david rubenstein is the cochairman and cofounder of the onlyle group and we know him bloomberg for hosting the david rubenstein show. vonnie: exactly. fantastic content from davos. back here in the u.s., time for our stock of the hour. shares of ge have been mixed. the shares were rising after the company reiterated its full-year profit forecast, and then we discovered they were under an sec investigation. now shares are down. joining us to explain it all is taylor riggs. taylor: let's start with the good news because shares were initially higher by 5% because they reiterated their full-year profit forecast for 2018 anywhere from a dollar to $1.07 a share. ceo john flannery said it
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are moving quickly to address their problems. cash is the number one focus, and they see more opportunities for cost reduction in their power unit so this is where things get interesting because we looked at the revenue coming from power some of which is the number one source of revenue that has been declining in the fourth quarter versus the fourth quarter the previous year, but then the aviation unit, which is the number two source of revenue, has been steady at about $7.2 billion so they are in the middle of that $20 billion divest your and looking for areas that can cut costs. vonnie: we have the $6.2 billion one-time charge and an sec investigation. taylor: here is what we know so far. the shares did. there gains in losing territory a limit. they will take a $6.2 billion charge related to an old insurance business that they are fully cooperating with the probe. to be fair, the cfo jimmy miller on the call said she is not overly concerned about the issues currently under scrutiny.
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vonnie: she would say that. she is the cfo. taylor: some of the issues with revenue recognition and depending how aggressive or conservative you are when you book that on your books, some of that is under scrutiny perhaps. insurance reserves increased related to a fourth-quarter charge. 1%nie: the stock down about although many have sold out. thank you for that. we will obviously keep an eye on ge very closely. mark: check out what is happening approaching the european close following stocks less than 35 minutes from the end of the session. ftse is down. dax is a third of 1% lower. the most interesting asset class today is the currency board. check it out. look at the dollar as the decline continues. lows down to a three-year against the euro. the euro up by 7/10 of 1%.
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fascinating to see tomorrow what and if mario draghi, the president of the european central bank, says about the euro. he didn't mention the euro volatility back in september. mention the euro volatility back in september. let's wait until tomorrow to see. unexpended resilience in the three months through november. employment rose. i will leave you with up on board today. yields in europe in the main markets looking like this. this is bloomberg. ♪ .
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mark: 11:00 a.m. in new york and 4:00 p.m. in london. 30 minutes left in the trading day in europe. from the european headquarters, i am maxim oreshkin. -- i am mark barton.
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vonnie: and i am vonnie quinn. this is the european close on bloomberg markets. mark: here are the top stories from the bloomberg and around the world, the dollar drops. focus on why russia's economy may be poised for growth after the longest recession since vladimir putin came to power almost two decades ago. the patriot on co-founder. -- itron -- patron's co-founder. this is what is


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